In 1989, the Hong Kong government embarked on a program to increase the provision of first-year first-degree places from 7 percent to 18 percent of the 17-20 age cohort. The expansion of tertiary education represents a large and exogenous increase in supply of university graduates to the territory. This paper measures the labor market effects of the expansion program by studying the changes in earnings premium for university graduates. Two alternative hypotheses, crowding and quality effects, are identified to explain why the earnings premium shrinks. The results support the view that the declining quality of university graduates is the prime candidate for the declining earnings premium.
|Publication status||Published - Oct 2003|
|Name||Hong Kong Institute of Economics and Business Strategy|
|Publisher||The University of Hong Kong|